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Ethena Labs and Securitize have launched Converge, a pioneering EVM-compatible Layer-1 blockchain aimed at merging traditional finance with decentralized finance.
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The innovative blockchain is set to enhance accessibility and efficiency in the tokenization of financial products, featuring a developer testnet due to launch soon.
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“Our vision is to provide the first purpose-built settlement layer where TradFi will merge with DeFi,” Ethena Labs stated, emphasizing the significance of USDe and USDtb.
Converge, an EVM-compatible Layer-1 blockchain by Ethena Labs and Securitize, aims to bridge TradFi and DeFi, offering new opportunities for asset tokenization.
What is Converge and What to Expect from It?
Converge will operate as an EVM-compatible network, ensuring a seamless development experience for builders. It will integrate key infrastructure providers, including LayerZero, Pyth Network, Wormhole, and RedStone, to facilitate robust interconnectivity within the blockchain ecosystem.
The network will utilize ENA, Ethena’s native governance token, for staking, while USDe and USDtb will function as the network’s native gas tokens, essential for transaction processing.
“Our vision is to provide the first purpose-built settlement layer where TradFi will merge with DeFi, centered on USDe & USDtb and secured by ENA,” the announcement read, highlighting the project’s strategic focus on token interoperability.
Securitize, a leading provider of real-world asset (RWA) tokenization, plans to launch tokenized assets on Converge, expanding the tokenization of financial products beyond treasury-backed assets and funds to include a wider range of securities across multiple asset classes.
Additionally, on Converge, Ethena will natively issue USDe, USDtb, and iUSDe, exporting these assets into TradFi-compatible formats to attract institutional investors, a key growth area for decentralized finance.
“We believe the biggest theme of this cycle and the coming years is the onboarding of institutional flows of capital,” stated industry analysts, underscoring the significant growth potential within the DeFi landscape.
By merging Ethena’s DeFi influence with Securitize’s expertise in tokenized securities, Converge aims to fill the existing gap between TradFi and DeFi.
The framework of Converge is built on three core principles:
- Permissionless DeFi Access: Users can participate in the decentralized financial ecosystem powered by USDe without undergoing KYC procedures.
- Permissioned TradFi Applications: Traditional financial institutions will interact securely with KYC-compliant parties through iUSDe and USDtb.
- Permissioned Financial Products: The platform will support various tokenized assets issued by Securitize, facilitating access to credit leverage, fixed-income products, and equity trading.
These pillars are designed to enhance the adoption of blockchain-based financial products across diverse user bases.
The Rise of Tokenized Assets and RWA Adoption
The launch of Converge aligns with the rapid growth of the RWA market, which has evidenced significant increases recently; the on-chain value of RWAs has reached $18.8 billion, marking a 17.81% increase over the last 30 days.
Real World Assets Sector Growth. Source: RWA.xyz
With over 90,550 asset holders and 117 active asset issuers, the RWA sector demonstrates substantial expansion.
“Real-World Assets is the fastest-growing crypto sector, and it’s not slowing down anytime soon,” an analyst noted on X (formerly Twitter), highlighting the momentum behind tokenized assets.
Boosting this trend, the total value of stablecoins has reached $224.5 billion, showing a 1.41% rise in the past month, with Ethena’s USDe emerging as a notable player as the fourth-largest stablecoin.
Conclusion
Converge presents a compelling opportunity to bridge the traditional and decentralized financial landscapes, paving the way for increased tokenization and institutional participation. As Converge gears up for its mainnet rollout, it embodies a significant step forward in merging the capabilities of both financial realms, ultimately aiming to enhance financial accessibility and efficiency.
